The failure to allow post-approval adverse event data to be used by non-pharmacovigilance experts, as in the Acthar case, may be a very expensive lesson for Questcor and Mallinckrodt.

A month ago, the New York Times ran a front-page business section story on Questcor and its primary revenue producing drug Acthar. In that article, the NYT reported on a bevy of previously undisclosed side effects linked to Acthar and the report highlighted the related risks – both patient safety risks, and the risks to Questcor’s future earnings potential should the FDA take action on the drug as a result of those side effects. The revenue risk was particularly troubling for Questcor because they are in active discussions to be acquired by another large pharma company, Mallinckrodt, for over $5 billion dollars. The vast majority of that purchase price is attributable to the success of Acthar in the marketplace and if that revenue were to decrease – or dry up entirely – it might scuttle the deal (or, at least, result in a very uncomfortable discussion on revised valuation).

To those of us used to working with the FAERS data from which the NYT article was derived, there was nothing new or particularly interesting about these disclosures. In fact, we regularly find major undisclosed safety concerns in our monthly data updates and make that information available to our clients.

So, we didn’t think too much about this article. We didn’t see it as news. Until this week.

On Wednesday, Questcor filed an 8-K – a public disclosure document – that included the side effect information that had already been detailed in the NYT article, along with some very interesting analysis.

Clearly, someone over at Questcor made the realization that these safety issues were, in fact, a big problem. In order to: a) salvage any possible deal with their pending acquirer; and b) not run afoul of federal securities laws, Questcor needed to get out in front of this story and publically disclose what has been reported.

The key disclosures made in that 8-K filing, as noted in a follow-up New York Times article this morning, were that “the number of patients reporting a so-called adverse event while using the drug last year represented almost 5 percent of prescriptions dispensed. The total number of events in 2013 reported by patients, who can experience multiple ill effects, was almost 14 percent of prescriptions, up from 9.1 percent in 2011.” Among the reported adverse events driving the spikes in reporting, according to the article, were abdominal pain, increased in blood sugar, and renal failure.

In an effort to better relate what those adverse event risks actually mean to the company and its pending deal, Questcor heavily beefed up its “Risks Associated With our Business” section of its public disclosures to include gems like this:

"Such events could subject us to costly litigation, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market Acthar, or materially impact our commercialization efforts,”

Wow. When 95% of your revenue is derived from a single drug and that drug’s revenue stream is coming under fire from previously undisclosed safety risks, you better believe that you should be disclosing that information to your public shareholders and your potential acquirer.

Pharma Guy's insight:

It does seem that more dangerous drugs are being approved by the FDA. As shown in the chart above/left, DEATHS reported to the FDA via its adverse event reporting system have increased dramatically in the last few years for which data is available.

Between 2003 and 2012, FDA received 588,000 death notices via Adverse Event Reports (AERs). This is scary considering that FDA's adverse event reporting system is notoriously inefficient. I've heard that FDA captures only about 10% of drug adverse events.

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